UK economy grows more than expected in boost for chancellor

The UK economy showed strong growth in the first three months of the year, according to official figures.

Gross domestic product (GDP) - the standard measure of an economy's value - grew 0.7% in the first quarter of 2025, the Office for National Statistics said. The rise is better than expected.

An increase of just 0.6% was anticipated by economists polled by the Reuters news agency. Money blog: Reaction as UK economy grows more than expected It's significantly better than the three months previous, in which a slight economic expansion of just 0.1% was reported for the final quarter of 2024.

Read more:Burberry to cut 1,700 jobs after multi-million pound lossCo-op updates on recovery after cyber attack forced empty shelves The ONS also said there was a small amount of growth last month, as GDP expanded 0.2% in March, which similarly beat expectations. No growth at all had been forecast for the month.

How did the economy grow? A large contribution to high GDP growth was an increase in output in the production sector, which rose 1.1%, driven by manufacturing and a 4% increase in water supply, the ONS said. Also working to push up the GDP figure was 0.7% growth in the biggest part of the UK economy - the services industry.

Wholesale, retail and computer programming services all performed well in the quarter, as did car leasing and advertising, the ONS said. It shows the economy was resilient, as the country headed into the global trade war sparked by President Trump's so-called 'liberation day' tariff announcement on 2 April.

GDP per capita, which gives a better sense of how well off or not people are feeling, has tended to be lower than the headline GDP figure in recent years. But for the first three months of this year, GDP per capita rose 0.5%.

Not for a year (the first quarter of 2024) has there been such large GDP growth per head. Welcome political news, for now The data is welcome news for a government who have identified growing the economy as its number one priority.

Chancellor Rachel Reeves is taking the figures as a political win, saying the UK economy has grown faster than the US, Canada, France, Italy and Germany. "Today's growth figures show the strength and potential of the UK economy, " she said.

"Up against a backdrop of global uncertainty, we are making the right choices now in the national interest." Such GDP numbers may not continue into April as businesses and consumers were hit with a raft of bill rises, and Mr Trump's tariffs fired the starting gun on a global trade war. Last month, water, energy and council tax bills rose across the country while employers faced higher wage costs from the rise in their national insurance contributions and the minimum wage.

But above-inflation wage growth and fading consumer caution could continue to boost the economy..